LOS ANGELES (Reuters)  In a move to boost
its potential audience, Pressplay  a joint venture between music giants
Vivendi Universal and Sony  is near a deal to offer its online music subscription
service on Microsoft's MSN network, sources close to the talks said Tuesday.

Microsoft,
Vivendi Universal and Sony all declined to comment, although sources close to
all three companies confirmed that negotiations  which have been continuing
for months  had intensified and that an announcement was expected soon.

According
to a source familiar with the talks, Pressplay is near a deal with Microsoft that
is similar to a distribution deal with Yahoo that will enable its users to stream
and eventually download music. Pressplay is expected to launch the music subscription
joint venture later this summer.

A source said the parties
were also trying to finalize a part of the deal that would make Microsoft's Windows
Media format an option for Pressplay's affiliates.

The
deal comes as all the big labels prepare to launch services to fill the void left
by Napster, the once wildly popular online song-swap service that has seen usage
dwindle due to a court-ordered injunction barring it from offering copyrighted
music. The injunction came as a result of a landmark lawsuit filed against the
Internet upstart by major record companies.

First announced
in May 2000 under the name Duet, Pressplay has yet to demonstrate its platform
and skeptics have questioned whether it has made much progress.

Several
sources speculated that Pressplay and Microsoft will announce their deal at an
online music summit to be hosted later this week in San Diego by MP3.com, which
was bought by Vivendi Universal this year for $372 million.

Microsoft
moves into 'content wars'

Sources said Universal
has long had a thorny relationship with Microsoft. One sticking point has been
Universal's primary use of a digital format known as Blue Matter to provide its
music. A deal with MSN would presumably mean opening Pressplay to the Windows
Media format.

Universal has struggled to some extent
with Blue Matter, with most fans preferring to use Windows Media, Liquid Audio
or MP3 for downloads. Eventually, all these formats will be supported by multiple
devices, some experts said.

Any deal between Pressplay
and Microsoft would be record-setting in several ways, in part because of the
access to a huge potential audience the MSN service would provide.

It
would also be a coup for Microsoft. The software giant's security technology has
been endorsed by most of the big labels, but these companies have not allowed
their content to be carried on Microsoft, in part because of concern the company,
which is feared for its strong-arm marketing tactics, would take over the distribution
of their music.

P.J. McNealy, senior analyst at research
firm GartnerG2, said Microsoft has remained the biggest question mark in the evolving
online music sector.

"If MSN is now a front end for
Pressplay, Microsoft has succeeded in jumping into the content wars," said McNealy.

The
remaining three big labels, including AOL Time Warner's Warner Music, EMI Group
and Bertelsmann's BMG have teamed up with Microsoft rival RealNetworks to form
a venture called MusicNet, which is also slated to launch in late summer.

MusicNet
has so far announced distribution deals with Napster, RealNetworks itself, and
another Microsoft competitor, AOL Time Warner's America Online.